Bill's Boards (BB) is an outdoor advertising company founded by William Longfall. William knows very little accounting so he hired a friend to "keep the books." Unfortunately, William did not review his friend's work and now it seems his friend has made a mess of the accounting records. William has provided you the following list of unadjusted account balances at BB September 30 fiscal year-end. You have reviewed the balances with William and made notes shown in the right column. BILL'S BOARDS Unadjusted Trial Balance At September 30 Account Name Cash Debits $ 12,300 Accounts Receivable. 920 Prepaid Rent 1,040 Supplies Equipment Accumulated Depreciation Accounts Payable 0 5,200 Credits Notes $ 0 1,810 Deferred Revenue 1,440 This balance equals the balance reported by the bank. A customer ordered $920 of advertising services to be provided in October. The accountant recorded this service by debiting Accounts Receivable and crediting Service Revenue. Starting January 1, BB agreed to pay $1,560 cash to rent the land on which its billboards are located, for the January- December period. The accountant adjusted this account on April 30 but has not adjusted it since. BB still has supplies costing $310 on hand on September 30. BB bought scaffolding and billboards in October last year. Because the equipment was bought at the beginning of the fiscal year, no depreciation is carried forward from prior years. BB purchased and received $1,810 of supplies used for creating advertising displays. The supplier is to be paid in October. This balance relates to $1,440 cash paid by a customer in August for advertising from September 1-November 30. Deferred Revenue Salaries and Wages Payable Income Tax Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense 46,300 Depreciation Expense Rent Expense 0 520 Supplies Expense 2,610 Income Tax Expense Totals 0 $ 68,890 1,440 0 320 1,420 5,310 58,590 $ 68,890 This balance relates to $1,440 cash paid by a customer in August for advertising from September 1-November 30. BB employees are still waiting to be paid for the last half of September. BB hasn't paid the $320 tax owed from the last fiscal year. BB has issued 2,820 shares for $1,420 cash. BB started business a few years ago, so this is the total accumulated earnings up to October 1 of last year. BB has provided $2,820 of services for which it hasn't yet billed customers or recorded in its accounting records. BB employees earn $4,300 per month. The employees were paid in full on August 31, and were paid again on September 15. About $1,300 of the usefulness of the equipment's $5,200 cost has been used up during the current fiscal year. BB incurs a small cost to rent the land on which its billboards are located. Rent for the current year has been paid in full. BB accountant expensed $2,610 of supplies purchased during the year because he assumed the supplies would be completely used by year-end. As noted above, he was wrong. BB tax rate is 20% of income before tax. 5 1 No Transaction a Service Revenue Accounts Receivable General Journal Debit Credit 920 920 2 b Rent Expense Prepaid Rent 650 650 3 Depreciation Expense 1,300 Accumulated Depreciation 1,300 4 d Deferred Revenue Service Revenue Accounts Receivable Service Revenue 480 480 2,820 2,820 6 f Salaries and Wages Expense 2,150 Salaries and Wages Payable 2,150 7 g Supplies Supplies Expense 310 310 8 h Income Tax Expense 2,570 Income Tax Payable 2,570 x Post the beginning balances and adjusting entries to the following T-accounts. Answer is not complete. Cash Debit Credit Beginning Balance 12,300 Ending Balance 12,300 Accounts Receivable Debit Credit Beginning Balance e. 920 2,820 920 a. Ending Balance 2,820 Prepaid Rent Supplies Debit Credit Debit Credit Beginning Balance 1,040 Beginning Balance 650 b. g. 310 Ending Balance 390 Ending Balance 310 Accumulated Depreciation Equipment Debit Credit Debit Beginning Balance Beginning Balance Credit 1,300 C. Ending Balance 0 Ending Balance 1,300 Beginning Balance Debit Ending Balance Accounts Payable Salaries and Wages Payable Debit Beginning Balance Ending Balance Credit Debit Beginning Balance d. Deferred Revenue 480 Credit 0 Ending Balance 480 Income Tax Payable Credit Debit Credit Beginning Balance 2,150 f. 2,150 Ending Balance 0 Common Stock Retained Earnings Debit Credit Debit Credit Beginning Balance Beginning Balance Ending Balance 0 Ending Balance 0 Beginning Balance Debit Ending Balance Debit Beginning Balance C. Service Revenue Salaries and Wages Expense Credit Debit Beginning Balance 2,820 e. f. 480 d. 3,300 Depreciation Expense 1,300 Ending Balance 1,300 Credit 2,150 Credit Ending Balance 2,150 Rent Expense Debit Credit Beginning Balance b. 650 Ending Balance 650 Income Tax Expense Debit Credit Beginning Balance 310 g. h. Supplies Expense Debit Credit Beginning Balance Ending Balance 310 Ending Balance 0 Cash BILL'S BOARDS Adjusted Trial Balance At September 30 Account Titles Accounts Receivable Prepaid Rent Supplies Equipment Accumulated Depreciation Accounts Payable Deferred Revenue Salaries and Wages Payable Income Tax Payable Common Stock Retained Earnings Debit Credit $ 12,300 2,820 390 310 1,300 2,150 Service Revenue Salaries and Wages Expense Depreciation Expense Rent Expense Supplies Expense Income Tax Expense Totals 1,300 $ 17,120 $ 3,450 BILL'S BOARDS Statement of Retained Earnings Beginning Balance Ending Balance $ 0 Required: Prepare a classified balance sheet for the year ended September 30. (Amounts to be deducted should be indicated by a minus sign.) BILL'S BOARDS Balance Sheet